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Sunday, 29 March 2015 22:00

Political wrangling over film incentives creates uncertainty for industry

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Hopwood DePree, TicTock Studios LLC Hopwood DePree, TicTock Studios LLC COURTESY PHOTO

It turns out that Hollywood, like most other industries, doesn’t like uncertainty.

While a recent vote by the Michigan House of Representatives to cut funding for the state’s film incentives program may lack the traction to pass in the Senate and get a signature from the governor, industry experts believe the vote could further chill studios’ desire to do business in the state.

“Money doesn’t like uncertainty,” said Joe Voss, a Grand Rapids-based attorney for clients in the entertainment business and senior counsel at Clark Hill PLC. “When there’s a lot of tinkering, it’s hard for productions to keep it all straight.”

That the House voted 58-51 earlier this month to end the state’s film incentives tends to reinforce the industry’s feeling of uncertainty over moving productions to Michigan, Voss said.

Filmmaker Hopwood DePree, the co-founder of Grand Haven-based TicTock Studios LLC and of the annual Saugatuck-based Waterfront Film Festival, agreed.

“The issue that Michigan has had is we haven’t been consistent,” DePree said. “The industry thinks we have been wishy-washy.”

Both Voss and DePree sit on the Michigan Film Office Advisory Council.

Mostly, the uncertainty for the film industry stems from the state Legislature constantly revisiting and tweaking the incentive packages the film office uses to attract productions to the state, a program that has frequently come under fire since its creation eight years ago.

Currently, the Michigan Film Office offers filmmakers a rebate from a budget that’s capped at $50 million annually through the 2016 fiscal year. That’s up from a $25 million budget in 2012 when the Legislature eliminated a lucrative 42-percent film tax credit model that had been in place from 2008 to 2011 and replaced it with the rebate program.

Despite the criticisms, the aggressive film tax credits appeared to work in attracting productions to the state. Prior to the incentives, film companies spent on average less than $2 million annually on shoots in the state. By comparison, in the four-year period the 42-percent tax credit was offered, an average of 41 films per year shot at locations in Michigan, according to records from the Michigan Film Office.

When the state launched the incentives in 2008, they were meant to build an industry in a state dominated by manufacturing, which was going through massive contraction at the time, DePree said.

“The industry needed incentives to get a jumpstart,” he said. “(Michigan) just wasn’t on the radar other than for Michigan filmmakers. It wasn’t on the national scope.”

During the period the state offered the tax credits, DePree said directors, producers and other industry representatives constantly visited Michigan to scout for locations and meet with local talent. For DePree, that translated into considerably less travel time to the coasts for discussions with industry executives, simply because many of them were already in Michigan anyway.

While the officials at the Michigan Film Office told MiBiz for a previous report that productions looking to shoot in Michigan prefer the newer rebate model to the former tax credit, the number of shoots statewide have dropped since the original program ended.

The Michigan Film Office approved rebates for just 17 productions in 2012, 21 films in 2013 and 27 shoots last year.

Additionally, a number of the local, independent projects from Michigan — including the critically-acclaimed Grand Rapids-based “Buzzard” that debuted at the South By Southwest Film Festival last year and was profiled this February in The New York Times — didn’t qualify for state assistance, which requires that films have a minimum budget of $100,000.

The impact of the Legislature’s tinkering with the film incentives also shows up in the ancillary economic activity associated with productions in West Michigan. Research supplied by Experience Grand Rapids shows that at the peak of the incentives in 2010, the film industry contributed to 11,347 room nights at Kent County hotels. That compares to zero room nights in 2013 and 1,869 last year, as one film and several commercials shot on location in the area.

NUMBERS GAME

While the uncertainty with Michigan has not done the state any favors, the film industry has proven to be fairly transient in recent years as it chases the best offer from states across the country, experts say. In essence, that’s led to Michigan fiercely competing with states such as Louisiana and New York, which have each ramped up incentives in recent years.

Even California, the home of many major production companies, has had to increase its incentives to keep productions in the state, according to a report in the Los Angeles Times last summer.

The constant competition with other states has critics in Michigan saying it’s time to end the state’s incentives for Hollywood altogether. Among the groups calling for an end to the program is the Lansing-based Michigan Chamber of Commerce, which says the incentives are “not showing meaningful results.”

“We have been very consistent: We do not agree that this is a worthwhile use, and we are not seeing meaningful data that this is creating jobs,” said Tricia Kinley, senior director of tax and regulatory reform at the Michigan Chamber.

Despite the ongoing political wrangling over film incentives and the results of the recent state House vote, it remains largely unclear whether the program will go away anytime soon.

While Gov. Rick Snyder is typically not supportive of incentives in general, “the incentives are a fairly new program, and it would be unfair to the people who made investments to our state to eliminate them completely,” said spokesperson Dave Murray in an email to MiBiz.

He declined to comment whether Snyder would veto the House bill to abrogate the film incentives if it were to reach his desk.

Representatives for Senate Majority Leader Arlan Meekhof, R-West Olive, did not return calls seeking comment before this report went to press. But in a March report from the Associated Press, Meekhof said he is “skeptical” of the bill passed by the House.

In the same report, House Minority Leader Tim Greimel, D-Auburn Hills, a supporter of the film credits, said the state should be looking at an overhaul of all incentives and not just targeting the incentives for one industry.

AN ISSUE OF TALENT

For Voss of Clark Hill, the state’s efforts to seed the creation of a legitimate film industry — whether one focused on attracting outside attention or growing the segment organically based on people already in Michigan — plays into the state’s focus on talent attraction and retention.

“Film incentives provide locally educated people a pipeline to local experiences,” Voss said, adding that out-of-town productions often use local personnel because it saves them the cost of bringing in crew members. “You can have people working and living here get great experience when films come here. People go where the jobs are.”

Read 2321 times Last modified on Monday, 30 March 2015 15:48

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